Treatment programs form Medicaid clients with alcohol-related problems are undergoing substantial change as fee for service is replaced by capitated financing. Little is known about the impact of new payment mechanisms. Oregon was one of the first states to implement capitated financing for Medicaid clients with alcohol-related problems. In May, 1995 treatment for alcohol and other drug abuse problems became the responsibility of prepaid health maintenance organizations. Prior to the adoption of capitated financing, a cohort of public sector chemical dependence program clients in the greater Portland area had been interviewed using a comprehensive instrument package (including the Addiction Severity Index) as part of a federally funded demonstration program called Target Cities. The cohort was re-interviewed at six months and twelve months after the initial measurements were obtained. A similar cohort is providing initial interview data now and will be re- interviewed in 1997 and 1998. These two cohorts provide a valuable before versus after picture that will illuminate the impact of capitated Medicaid on public sector clients seeking treatment for alcohol-related problems. Similar data are available from a third group of subjects whose Supplemental Security Income due to alcohol or drug abuse was discontinued in 1997. The proposed record linkage and secondary data analysis project will combine information from several sources in order to examine the effect of changing from fee for service to prepayment on Medicaid clients with alcohol-related problems. The proposed study will: (1) collect client level claims and encounter data from the state alcohol and drug abuse agency and from the state mental health agency in addition to information from the statewide employment and criminal justice data systems, (2) collect Medicaid eligibility data from the state Medicaid agency, (3) link state administrative data with client interview data, and (4) compare client service use and outcomes before versus after the transition from fee for service to capitation. Statistical models derived from the before versus after data can be tested on the Supplemental Security Income subjects. This knowledge base will be of considerable interest to those states that are contemplating the replacement of fee for service with prepaid systems in Medicaid programs for clients with alcohol-related problems.